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Stuart Says: Lowering uncertainty involves investment

‘As a farming industry, we must ask ourselves if such weather was a freak occurrence or is it a sign of things to come’. Stuart Meikle is back with his regular column again this week.

A word I have heard frequently in recent days is ‘freak’. The short, sharp, cold snap accompanied by snow and high winds was certainly a highly unusual occurrence, for Ireland. Elsewhere such is the norm and planning and contingencies are in place. The systems are designed to cope.

Investing to reduce the farm’s exposure to ‘risk’ events

As a farming industry, we must ask ourselves if such weather was a freak occurrence or is it a sign of things to come. There is no more uncertain industry than farming; albeit we have tried to reduce that uncertainty through investment in, for example, controlled-atmosphere production systems; systems that themselves are now recognized as coming with difficult-to-measure externalities. As other examples, one can also cite irrigation and drainage systems as risk-mitigating investments.

Invariable, lowering uncertainty involves investment, be it in long-term infrastructure or short-term, routine or pre-emptive use of pesticides or animal-health treatments. Farmers rightfully do not like uncertainty, as inherent as it is in their everyday lives. Managing it is also one of the major costs incurred by any agricultural or horticultural business. It is not about buying risk management tools from the finance sector [which does little for food security]; it is about investing in tangible assets and inputs that protect the productive flow of the business.

What investments to make are often the most important decisions agricultural and horticultural business managers make. It is why we as academic staff teaching the subject inflicted the study of statistics upon our students. Understanding probability, intuitively and analytically, is a crucial skill for such managers. Simply, it impacts at every level of the business, be it production or market-related. Budgeting is an important tool for annual and long-term management purposes, but it is one that should also be enhanced by looking into the probability of key events happening.

Where is our weather going?

Uncertainty is also responsible for the fault line that exists between the farming sector and those stating that we must urgently address climate-change. Too often, the farming community does not know what this means for their individual businesses. And at the industry level, we also need to understand more and to work out its direct consequences. We need information to quantify its impacts and to invest accordingly. One recognises that the timeframe to act is now short, but it is time the parties sat around a table and agreed what the future climate expectations are. It will allow the industry and its individual decision-makers to analyse the options and to plan. Greater clarity about future weather patterns and their consequences will motivate change.

Of course, one does recognise that there are bigger issues afoot as climate change is far from a localised issue; it is global. The problem is that people tend to think local and short-term, although there are signs that more and more people are awakening to the wider realities; plastics and driving diesel cars in urban environments being two cases in point. It would, however, be useful to see the prognosis for what is the new normal for the Irish climate. Was this recent event a freak or not?

Changing weather patterns will have investment consequences

There is a danger of over-reaction to a freak event. The cold snap has, nevertheless, raised question marks over how livestock are kept. On that specific issue, my own view is that it is about exposure as much as cold and it is not just about last week’s obvious weather event, winter housing needs to consider more the severity of wind, rain and cold, conditions that are not uncommon in Ireland. Beyond that, the industry will have to assess the needs to bury water pipes deeper, the snow loading on buildings and, what should have been a priority after the autumn storms [another freak?], generators on dairy, if not all stock, farms. We should also be considering the absolute necessity of on-site living accommodation for staff, a problem that tends to exist where land holdings are fragmented, and stock not always housed on the home farm.

The common theme to these issues is investment. Farming is an expensive business that requires capital. It is very rare that it can be done on the cheap. And there is far too much focus in Ireland upon trying to be the lowest cost producer. It is not achievable, and thus the industry-planning mind-set needs to change, not least because there are many issues now coming into play and climate change and the weather is just one of them. We need to understand and quantify them better as climatic knowledge is vital business planning information. We do, nonetheless need help to create that knowledge as no industry can successfully work off vagaries.

It is information we must have. We need to determine what are the likely scenarios facing us and we need to plan change and investment accordingly. And sadly, it is not just about our operational weather, it is also about our markets; our soils; our animal welfare standards; our flora and fauna, the air that we breathe and the water we drink. We are farming in complicated times and, yes, that is a freak, perfect storm ahead.